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Misery Seeks Company – China Courts India to fight US Trade War

Misery Seeks Company – China Courts India to fight US Trade War

US sanctions against China seems to be having its intended effect. As pressure mounts, China’s change of stance is becoming more evident. According to recent reports President Trump and Chinese leader Xi Jinping are likely to meet at the G20 summit in Buenos Aires in November in an effort to work out a solution. But the meeting of the two leaders may not produce any dramatic resolution, given the tough stand of both the countries.

That the Chinese economy is bearing the brunt is in no doubt. Ford reported that its September sales in China fell 43% compared to same period last year. This comes in the midst of a big slump in Chinese auto sales. The IMF, for its part, has already signaled the slowdown of the Chinese economy and put its GDP growth estimates for 2019 at 6.2%. Despite all the bad news on the economic front, Chinese leadership continues to put up a brave face.

The US appears to have its strategy cut out. Vice President Pence, in a hard hitting speech at the Hudson Institute, unequivocally charged China with interfering in US elections and warned of consequences. In its 2018 National Defense Strategy paper, the US has clearly identified the two ‘revisionists powers – China and Russia’ as main threats.  The paper goes on to further recognize ‘China’s military modernization, influence operations, and predatory economics in its efforts to coerce neighboring countries to reorder the Indo-Pacific region to its advantage’ and perceives it as a long term threat to US interests.

The series of events leading up to the new set of tariffs on Chinese imports as well as the subsequent pronouncements should leave no room for doubt about US intentions. If anything, it is clear that the US will not stop with just the trade war. It is only part of an overarching strategy to contain Chinese influence globally.

China’s strategy, on the other hand, seems ambiguous and is banking on flat defiance of the US as a measure of projecting its power. It has unleashed a massive propaganda campaign, particularly in the US media, in a determined bid to win friends. Not surprisingly, many pundits have opined on how the trade war with China is unsustainable and could hurt the US too. But all this may not really alter the situation on the ground which is firmly in favor of the US

On the international scene, China has used its influence to marshal its friends and allies in an attempt to build a coalition to portray the US as the chief villain of the world. In this context, it is indeed interesting to see that China has reached out to India, pontificating on the requirements of ‘a stable environment that will facilitate the growth of the two key economies’. In its attempt to win India to its side in its trade war with the US, it has called for the two countries to join together to bring about a ‘more just and reasonable international order’.

China’s change in tone and tenor – evident in its statements and diplomatic outreach – is only symptomatic of the severe stress on its economy and political leadership. There are also indications of a lack of cohesion amongst its leadership in responding to the US.

Many in India recall the often rancid and undiplomatic statements emanating from its foreign office during the Dokhlam crisis. But the very same establishment has now unleashed the equivalent of a diplomatic charm offensive. This only highlights the fact that the country is up against the wall in its bid to untangle itself from the costly trade war.

But India is no China in every sense of the word. Its economy is a not as big, nor is it as lopsided and heavily dependent on exports to the US for its survival. Secondly and most importantly, India is a plural democracy in the truest sense of the term and is in no danger of a systemic collapse if and when sanctions are imposed.

It is worth pointing out here that following the Pokhran II nuclear explosions in 1998, many countries including China, Japan and Canada condemned India. China, for its part, was at the forefront, demanding international actions against India. But now that the tables have turned, China has suddenly discovered the virtues of ‘regional economic stability and growth’ by working together.

When the US did impose sanctions on India in May 1998 following Pokhran II, the country did not implode. The fact was that its citizens rallied together in support of the democratically elected government. But in China’s case, their leadership is acutely aware that prolonged sanctions could trigger internal unrest and rebellion that could easily threaten its structural integrity as a nation state.

Unlike China, India’s relationship with the US is on an entirely different footing. It has no overt or covert aspirations to unseat the US as the world’s superpower, nor does it have a confrontationist approach to it. But it is indeed true that, like China, India probably has a boat load of differences with the US, on issues ranging from trade to political and world view. But that is par for the course betwixt democracies.

But at the end of the day, despite the differences, the US and India, as history bears witness, have resorted to bilateral discussions to resolve these issues. Unlike China, there is no public record of India threatening or confronting the US.

Being an authoritarian set up, China lacks that fundamental connect with the US or India. At a time when it is in serious trouble with the US, it cannot pretend a have a comradery with India since the latter too is ‘impacted by Trump’s unpredictable trade policies’.

Definitely, China is expending its diplomatic resources in creating a mirage of a synergy with India out of a non-existent common cause.  The ground reality is that the leadership in India and the US are aware of the phoniness of this outreach by China.

In fact India must – and there is ample evidence to think it has – see the speciousness of this argument. It cannot join hands with China to make a common cause. India’s world view and priorities are different and dictated by New Delhi, not Beijing.

Misery loves company and China’s outreach to India is definitely a case in point.

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Posted by on October 15, 2018 in China, Donald Trump, Economics, Foreign Policy, Trade, US

 

India Changes Tack in Dealing with China

India Changes Tack in Dealing with China

Relations between India and China can best be described as tenuous, beset with mutual suspicion and distrust. A quick review of the relations between the two countries over the last six decades or so shows that India had been contending with an ever-increasing trajectory of belligerence and threats to its economic interests and territorial integrity. China has always perceived India as a potential competitor and a threat. Hence it has used every trick in the book to erect roadblocks in India’s path either directly or indirectly through its proxies.

India has long been aware of China’s support to Pakistan – from building nuclear weapons to tacit encouragement of terrorism against it. Its intelligence agencies have also long been aware of Chinese involvement inside India – from funding communists to maintaining a bevy of friendly journalists on its payroll to promote its point of view. But that is par for the course in today’s pernicious international ecosystem and India has no reason to complain but rather realign its own strategic policy responses that safeguard its interests.

Of course, there have definitely been several individual instances of India standing up to China – in military responses to border incidents prior to Dokhlam (2017) or while negotiating border disputes. But overall, it conspicuously lacked the sting to deter China. That would explain the condescending attitude and a second class treatment towards India.

This has largely been attributed to the fact that India for over three decades had coalition governments that were by definition weak. Hence in international affairs, more so with regards to its neighbors, India continued to punch below its weight. But that explanation is not convincing, given that many countries with far more unstable governments have stood up to their aggressive neighbors.

All that seem to have slowly but surely changed under Prime Minister Modi. After an initial but short-lived honeymoon with both Pakistan and China, India has displayed a nuanced ratcheting up of assertiveness. There are ample pieces of evidence that point in this direction. This piece will highlight three recent reports that have attracted immense interest that attest to India’s emerging assertiveness.

Firstly, the political crisis in Maldives brought the navies of India and China to a near confrontation in the Indian Ocean. In what is seen as blatant gunboat diplomacy, China had dispatched a flotilla of several vessels (some reports have said eleven) including missile destroyers to the Indian Ocean Region (IOR). But the Indian Navy threatened action and fired warning shots that stopped the flotilla and forced the Chinese Navy (PLAN) to retreat. (Nikkei Asian Review 3/23/2018)

Secondly, India has beefed up its military along the Chinese border in the north from Ladakh to Arunachal Pradesh in the north east (Times of India 3/31/2018). Not only has the density of troops been increased in these sectors, but also a comprehensive upgrade in defense infrastructure is evident – roads, bridges, advanced landing ground (ALG), military hospitals, etc.

Thirdly, in an apparent reversal of its earlier stand and much to the annoyance of the Chinese, a government minister and a senior BJP functionary attended the 60th anniversary of Dalai Lama’s arrival in India (Economic Times 3/31/2018).

These diplomatic incidents or updates to its statecraft, if you will, should be seen as outcomes of an inner overhaul of the operating guidelines for handling China under the Modi dispensation. Clearly a confident India has come up with its own answers to the management of a pernicious neighborhood. India is now seen as able and willing to match the belligerence from Beijing in equal measure.

It must be noted in this context that China’s rise as a global power has been punctuated by bulldozing   civil societies, grabbing others territories, defying judgements of the International court of Justice (ICJ) among others. In the same breadth it has diabolically quoted historical treaties and international law to justify its land grab frustrating many of its neighbors. Unlike India, its rise has hardly been peaceful.

With several countries bristling against China – Brunei, Malaysia, Vietnam, Indonesia, Philippines, India, and Japan and of course the US, the writing on the wall is self-evident. China’s belligerence and open defiance of international law – as demonstrated in the case of the South China Sea dispute – is the raison d’etre for the formation of a loose coalition-of-the-aggrieved against it. If China continues to pursue its current course, this loose coalition could solidify into a formidable alliance that would only bode ill and spell disaster for China even in the span of a decade.

For a dictatorial and authoritarian state, where hundreds of millions of people continue to be denied basic civil liberties, the domestic situation in China is indeed fragile at best. For any nation this is a veritable internal time bomb. Any misstep or social crises like the “Arab Spring Uprising” could be irretrievable and have disastrous consequences for that country.

China’s troubles are not limited to its immediate neighborhood. As China and the US are continue to  engage` in a war of words and slapping sanctions and counter sanctions at each other, it is difficult to read the tea leaves to determine if an early rapprochement is in the horizon. But whatever be the outcome of this incipient trade war, it does provide India a window of opportunity to expand and deepen its relations with likeminded countries that perforce have to counter and stand up to China.

The regular military exercises by India’s armed forces with their counterparts in other friendly countries designed to expand its influence appear to be paying dividend. Inviting the ten heads of states from ASEAN to Delhi for Republic Day celebrations in January 2018 is another initiative designed to contain China. Although it is anybody’s guess as to how ASEAN nations will reciprocate, India has made the right moves.

In hindsight, India’s refusal to back down in heights of Dohklam in 2017 is indeed an inflection point. The rout of 1962 or the sense of inferiority perceived by the Indian political establishment vis-a-vis China are now buried in history. For now, India seems to be energized and arming itself to its teeth and flexing its muscles.

However, there will be more Dokhlam type “salami slicing” situations for India to encounter – be it in the heights of the Himalayas or the depths of the Indian Ocean – but the response will be unprecedented and definitely not to China’s liking.

 

Dokhlam – India stands up to China

Dokhlam – India stands up to China

India’s tough stand comes from a confident military

The Dokhlam standoff between China and India in the remote mountain heights of Bhutan had been under media attention for several weeks. It threatened to escalate into a full scale war between the two Asian giants

The dispute was triggered by China’s People’s Liberation Army (PLA) Chinese army personnel who moved into Bhutanese territory to build a road on a thin slice of land which forms a tri junction between China, Bhutan and India. The road that the Chinese were attempting to build for movement of their armed forces was well inside Bhutan. India wasted no time and moved its forces into the area and stopped the Chinese on their track and refused to back down. By virtue of a decades old friendship treaty, India is obliged to protect the safety and integrity of the Bhutanese state. Hence the Indian military intervention in Bhutan.

For India, this encroachment was mortally close to the Siliguri Corridor or “Chicken’s Neck” – a 30 KM wide tract of Indian land that connects the north eastern states with mainland India. India had pretty much no option other than stop the Chinese from coming anywhere near the chicken’s neck. Hence it stood its ground, irrespective of the consequences.

The standoff lasted over two months and gave the world a unique perspective into the power play between the two countries. From the start, China took to an offensive media strategy, obfuscating the real issue of “salami slicing”– illegal grabbing of neighboring country’s land – and hoping India would be pressured to withdrawing its objections. The shrill language and open threats of war with India – something unprecedented in its crassness and lack of diplomatic finesse – stood out and stunned observers and diplomatic circles in world capitals.

India’s response on the other hand– as seen by the External Affairs Minister’s statement in Parliament – was well calibrated and dignified and stressed on diplomatic resolution of the standoff while simultaneously refusing to withdraw.

China had insisted on India’s unilaterally withdrawal to resolve the standoff. However, when the disengagement was officially announced, both countries had agreed to withdraw simultaneously, albeit 150 meters from the disputed area and on the same day. Most importantly, India had its way and had stopped China’s road building activity. A tame retreat by China, after all the bullying, huffing and puffing.

Whichever way the standoff is looked at, India seems to have the upper hand. For China, on the other hand, it has proved to be a major diplomatic and military embarrassment. Most importantly, it has spawned a reassessment by its other neighbors with whom there are current border disputes. For example, since the Dokhlam standoff, Indonesia has now openly challenged China on the South China Sea dispute.

The Dokhlam standoff has important consequences that will determine the future course of relations between the two countries. It will also greatly influence India’s relations with other nations that are wary of China, for India is the first power in recent times to standup to China’s bullying.  Thirdly, the standoff will be a new benchmark for negotiations on bilateral relations and border dispute, given that now India has an upper hand and has demonstrated it is politically willing and capable of considering the use of its military, if needed, to resolve border issues.

The reasons for India standings its ground against China are worth examining. Detailed review and analysis of the nearly 72 days eye-ball to eye-ball confrontation is indeed revealing. Three important tracks – military, diplomatic and economic – worked 24/7 to stitch together the disengagement agreement.

Unlike the Chinese media bluster and rude foreign ministry press briefings, India’s responses were mostly below the radar and off press, yet dignified.  India worked its diplomatic offensive by quietly briefing key world capitals and in return sought their support. Japan’s decision to openly support India was a big win for India, as the efforts of three years of hard diplomacy was paying dividends now. India even hinted economic sanctions – something that terrified the Chinese. Notably, permissions were denied for Chinese investments in Pharma sector.

While all these measures helped, it must be reiterated that it was the confidant Indian military that gave the political leadership the strength and guts to call China’s bluff. Sadly, the Indian and international press seemed to have ignored it.

It is well known that India has been ramping up its military capabilities over the last decade or so. But the pace has accelerated after PM Modi took office. The northern borders have received a fair share of the new investments in military assets. The refurbished Indian military is now light years ahead and among the top fighting forces in the world.

Secondly, given the vulnerability of the Siliguri Corridor, India has long shored up its military and strategic assets in the area and is well entrenched. Countless exercises conducted over the years have kept the forces on their toes to expect the unexpected. So this border intrusion was by no means a surprise to the Indian Army which was well equipped and exercised to take on the adversary.

Thirdly, at the tactical level, the terrain in the Dokhlam valley itself was not in favor of the Chinese. The Indian Army, occupying the heights, had unhindered view of more than 30 KM into the valley into China. Any troop movement would not only be devoid of the surprise element, but also be an easy target of the Indian army.

Fourthly, India quietly and swiftly put its troops on operational alert all along the northern border. It moved its C-130 J Super Hercules strategic aircrafts to bolster its existing strategic fleet based at the Air Force Station in Panagarh, northwest of Kolkata. This put the 17 Strike Corps as well as high altitude acclimatized divisions (59 Division) in readiness and within few minutes of flying from the standoff scene.

Militarily, it was sending unmistakable signals to China that it was no easy push over and that unlike 1962, it would have no hesitation in using its Air Force and other strategic assets if the circumstances warranted. Politically, this was a clear departure and demonstrated a new assertiveness that would brook no threat to the country’s integrity.

For India, the Dokhlam standoff has ended on a high note, but the problem of “salami slicing” by the PLA elsewhere is an ever present threat.  It would be foolhardy for India to let its guard down and drown itself in self-glory. For the PLA to venture into Dokhlam is nothing short of a glaring miscalculation and sheer stupidity. Round one to India.

 
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Posted by on September 18, 2017 in China, Foreign Policy, India, Indian Army

 

Destabilizing America From Within

Trump_Press1President Trump’s first five months in office have truly been action packed.  Many of his new team members have been let go or have resigned on their own. This comes on top of the delayed confirmations of many of the President’s picks. Not to forget the series of street protests, arson and other expressions of anger and opposition to the incumbent president. All this, as Trump himself has pointed out, have been a road block for the administration to even get settled in office. But as these fester, they are taking on a new avatar that could tip the scales and severely scar America – by dividing its people and deepening the chasm in its polity.

There have been almost continuous protest rallies after the results of the elections were announced, often resulting in arson and violence across country. These protests have been no impromptu gatherings, but well planned, funded and executed with political backing. For instance, social media have been afire with pictures of protesters being brought in to locations in charted buses. Needless to say, that while the protests themselves are an unalienable right in a democracy, it now appears in hindsight that there is elaborate machinery supporting all this. The strategy of the detractors seems to be to keep the flame of dissent alive and keep the administration in a perpetual firefighting mode and thus deny any room to settle down for governance. This is really disconcerting.

In all this, the press and media too seem to have been at their divisive best. The diverse spin from the cable channels often buries the news and the bitter tirades leave the viewers confused and disgusted. Any neutral American can see that the media is definitely driven firmly by its agenda to oppose the Trump administration on anything and everything. The spike in unnamed sources and publication of what appears to be a running stream of sensitive intelligence leaks by established media leaders has only befuddled the average American viewer. That none of these allegations have been proved has only added to the divisiveness.

The leaking of photo evidence in the recent Manchester blast case in the UK is the latest in intelligence leaks. This has strained US-UK relations and an infuriated Prime Minister Theresa May had to complain to President Trump. It appears that the antagonists of the administration would stop at nothing – even irking a close ally – in trying to get at President Trump. Americans now seem to believe in social media more than the cable networks. The networks, who themselves have been the casualty for their actions as viewership and readership have tanked across the board, appear to be in no mood to relent.

The media and press in a democracy undoubtedly have a very important role to play. They are the watchdogs that are first line of defense against an errant administration. But to constantly quote unnamed and unverified sources to support their allegations has only eroded the credibility of a key institution of democracy.  Agreed, we have to live with this in a plural democracy. But the scale and level of acrimony that this has generated is unbelievable and has only deepened the divide.

The Democrats – judging from statements issued by Senator Hillary Clinton as well as Senate and House representatives – have obviously not yet gotten over the electoral defeat. In fact, John Lewis, a Democratic Congressman from Georgia has called Trump an illegitimate President on multiple occasions on television. This is indeed a shocking commentary of the political leaders in a mature democracy, and indeed the leader of the free world, behaving like scorned brats after losing an election.  All this speaks of the new low in current politics.

Most Americans, irrespective of party affiliations, in the best democratic traditions of the country have accepted the election results and have already moved on and are disgusted by the continuous attempts deepen the divide. Efforts to keep the acrimony alive are clearly doing the biggest disservice to the US. The Democrats, media, and sections of the Republican party, on the other hand, seem to be stuck in a time warp and are perilously insulated from public opinion.

These internal dissensions are bound to impact the international credibility and standing of the US. German Chancellor Angela Merkel has just sounded the bugle of mutiny of sorts against the US when she called on Europe to not count on the US and UK for their protection. These are unprecedented statements from allies that many would not have even contemplated would ever be happening against the US. This is because the US is now being perceived by friends and foes alike, as a house divided and hence a weak power.

In a democracy, diverse views and debates are essential for liberty and freedom.  But using these established democratic traditions as a clever tool to divide the people and embarrass a new administration in office is unacceptable. The Trump administration by no means deserves any undue favors from the watchdogs of a free society or in the court of public opinion. But it has a rightful claim to its legitimate space and duty to fulfill and execute the mandate of the people.

The efforts to sustain anti-Trump protests and put multiple roadblocks for the administration has reached a scale and magnitude that many fear can tip the balance towards instability. Donald Trump won the election fair and square and the Democrats lost. They need to accept the verdict of the American people. They will have their say and opportunity in 2020, but till then they need to let Trump govern.

The risk for America is too great and if the country trips, only chaos and ignominy will visit the US. Most Americans understand this. America and its people have moved on and expect the political establishment to close ranks and put a better show – for the sake of the country.   America has to get past the angst of electoral reverses and deal with some real issues – economic recovery, healthcare legislations and other policy issues that will determine the well being of its people in the coming years. The protagonists and antagonists need to back down and do their bid to reduce the rancor and provide constructive criticism and help Trump govern. America, urgently needs to heal now. A large dose of healing is what is called for.

 

Europe On A Slippery Slope

Europe1

The attack near the UK Parliament on March 22nd this year by 52-year-old Khalid Masood that killed four innocent people and injured over forty innocent people is a stark reminder of the deteriorating situation in not just UK, but in Europe at large. The continuing episodes of terror strikes in the streets of London, Paris, Brussels, Frankfurt and elsewhere in Europe are not the only burning issue haunting policy makers in Europe.

The continent seems to be firmly in the grip of multiple deep impacting forces that can change the face of Europe forever. The rise of Islamic terror, prolonged economic downturn, Euro-skepticism and the potential breakdown of relations with the US could push the continent over the edge. And quickly. This is cause for concern.

Some historical perspectives on Europe is in order. Europe has long set the global EU_unemploymentstandards for state welfare programs and has been a beacon of liberal thinking in a post-world-war-II world. Minimum wages, state funded health care, subsidized/ state funded education, open borders, ban on capital punishment – you name it and Europe was leading the way in liberal welfare economics and thought leadership.

But the developments in the recent past seem to have put the Europe of yore to shame. With calls for stopping immigration, border walls, restricting infra-Europe labor movement etc., it seems to be unmistakably altering course. As long as the economies were strong and resources were aplenty, European liberalism and altruism had thriven. Not anymore.

Unemployment in European Union has been running high for the last several years following the recession of 2008-2009. In fact, unemployment at some EU member nations like Spain, Greece, Italy – to mention just a few – have been at never seen historical highs.  With tanking economies, all surplus and generosity have vanished and now self-preservation seems to overshadow everything – from immigration, to economic and strategic policy decisions. Many of the recent social and political turbulence are symptoms of this deeper economic malaise. With this trend, in just a few years, Europe will slowly but unmistakable lose its sheen.

EU_terror.pngRadical Islamic terror is another menace that Europe is confronted with. Not a day passes without some report of an act of terror or police action against the terrorists. That the terrorists are able to strike periodically, despite the best counter-terror investments speaks of the magnitude of the problem. The following pic (courtesy: Express.co.uk) highlights the toll of the spread of the scourge of radical Islamic terror across the continent.

Radicalization and high unemployment among local youth as well as the recent influx of Muslim immigrants under the age of 35 has only acerbated the problem. The high incidence of crimes against women in Sweden and Germany has shocked all. Even Chancellor Angela Merkel of Germany has stressed the need for the immigrants to respect local laws. Merkel’s conservative Christian Democratic Union (CDU) party has, although belatedly, called for stricter rules for Islamic preachers and a ban on foreign funding of mosques.

Unfortunately, Europe cannot wish away terrorism. Experience of countries like India suggests that it is a war of attrition and states have to be vigilant over the long haul. Europe needs to remain united and share intelligence and expertise to win. However, recent statements by Prime Minister May suggests otherwise. She has linked the issue of terror cooperation with Brexit and has already sent alarm bells ringing in Brussels.

Thirdly, Europe has always been a lead player in projecting military power across the world. Together with the US, Europe has been part of the prime military and economic leadership – the so called ‘West’. The NATO alliance is central to this power manifestation that has successfully policed the world and determined strategic outcomes, regime changes and what have you.

With Trump in office in the US, the future of NATO is on the negotiating Table. Trump has openly called on Europe to pay its fair share of the cost of upkeep of the alliance. Although, Trump has since clarified that he supports NATO, it is anybody’s guess as to what the future will hold. But more important from Europe’s point of view is where it stands in the pecking order in the alliance. One thing seems to be certain. It will not be business as usual and Europe will have to pay to stay, at the very least.

The EU was again in the spotlight for the wrong reasons. Jean-Claude Juncker, President of the European Commission spoke of breaking up of the US. This unbelievably shocking statement came at a time when the US President Trump has openly stated his disdain for the Union and actively encouraged Britain’s exit. It is the worst diplomatic faux pas a senior functionary of that rank can commit.  You don’t mess with the world’s sole super power and get away with it. The fall out will be keenly watched.

Whichever way this is looked at, it is indeed the rock bottom of relations between two important and powerful bodies in the world. It is very difficult, under the current climate, to see improvement in relations between them. In this clash with the titan, there will be only one winner – and it is the mightier US. The loser in the bargain is obviously the EU. In the coming months, one can expect a frosty pond that will widen the chasm between the allies.

In another disturbing development, Turkey vent its anger against Denmark and Germany in a manner that has startled the diplomatic corps world over. Upset over the ban imposed by Denmark in preventing its ministers from meeting expatriate Turks, Turkey called them “racists” and “Nazis”. These epithets are rarely used and heard in diplomatic exchanges, whatever be the provocation.  What equally surprised observers was the almost effete response from Europe. The Europe of a decade ago, would have called for sanctions against Turkey at a minimum, if not military strikes. But that points to a weakening Europe and Turkey definitely seems to have sensed this.

Europe is a huge economy and a major military power – individually and collectively and most certainly may have the resilience to withstand choppy waters. But the deep impacting forces that are acting in confluence will indeed be a test of every fiber of strength and ingenuity the Union possesses. The biggest worry is the continuing weak economy that could prove to be the tipping point. Europe desperately needs help and must stay united to survive.

Every nation, alliance and trade grouping constantly faces problems. But it is the ability to resolve them that will determine their longevity. The deep impacting problems described above, by themselves, may not be an existential threat. But what is really disconcerting observers is the absence of statesmanship and the inability of European leaders to reach out -bilaterally and multilaterally – and hammer out policy prescriptions that will meet the changing aspirations of newer generation that has suddenly discovered its nationalistic pride. It is equally important to reach out across the pond to the US and partner the Trump administration, rather than confront it. But what we are hearing are shrill jingoistic dialects that create mores fissures and unite none.

While it is too early and almost churlish to predict the demise of the EU in the short term, it definitely does not seem to have a great future even beyond the medium term.

 
 

Trump’s Economic Diplomacy – A Pundit’s view

As President elect Donald Trump and incumbent President Obama work out details of a smooth transition, Americans and the world at large will keenly follow how the incoming administration takes shape and influences their lives.

Many chaltrump_obamalenges await the new administration. Hot button issues on the domestic front will undoubtedly dominate Trump’s attention. As he assembles a top talent team, Trump has promised economic revival as his top priority with immediate focus on Tax reforms, Infrastructure, Healthcare and Immigration. If he can pull this off, it will be unprecedented and generate millions of jobs for middle America.

As part of this quest, the new administration will certainly reassess US participation in economic and trade agreements. It will seek to renegotiate or redraw these agreements to promote American jobs. Most likely, the Transpacific Trade Partnership (TPP) will be replaced by a new trade agreement.

The Trump administration’s heavy economic agenda will likely be reflected in its foreign policy initiatives also. Economic Diplomacy will dominate while erstwhile interventionist doctrine may take a back seat, if not abandoned altogether. This could mean that US may scale down its involvement from conflict zones and other problematic areas of the world. This new diplomatic doctrine will put the spotlight on four areas – Europe, Russia, China and India.

Relationship with Europe will require a lot of sustained and energetic work. It is no secret that many European leaders have been skeptical of Trump. Their reactions to Trump’s election have ranged from nervous to outright undiplomatic. For example, the French ambassador to US raised eyebrows with his ‘undiplomatic tweets’ that he is reported to have subsequently deleted. German Chancellor Merkel’s response to Trump election was terse and calibrated. These reactions have publicly exposed the underlying discomfort among European allies.

Traditionally, the US has almost had a mystical influence on Europe. Despite differences, mostly bilateral, Europe identified itself with the US as an extension of itself. At least till Trump came on the scene. Trump had been critical of Germany’s intake of Syrian refugees during his campaign. He had also wanted the allies to contribute their fair share for the maintenance of NATO. Trump’s bluntness and his trademark lack of political correctness has soured relations.

It must be mentioned here that much of this disquiet among leaders about Trump has spawned from the fact that they tend to see and read Trump literally – word for word. They see his political incorrectness, but miss the larger message, often relying on an image portrayed by the media to understand him. But the media too, as seen in the election cycle, is guilty of misreading and missing Trump larger message. The sooner Europe gets past this mindset, the sooner will Trump reach out to them.

But the fact is that an economically weakened Europe needs the US for recovery. In return the US too needs Europe’s support in establishing Western might across the globe. This mutual dependence and a long history of partnership will endure and continue to sustain the relationship, albeit with creases that can be ironed out. But that should not dismiss the angst in Europe as the incoming administration works with individual European allies and the EU. However, with his native shrewdness and ability to strike deals, it may not be long before Trump and the allies are back to business as usual.

The North Atlantic Treaty Alliance (NATO) has been predicated on a communist threat from Soviet Union. But after the collapse of the Soviet Union, many strategic analyst have rightly questioned the need for NATO. Trump may be right in questioning the huge cost of maintaining the alliance, given that there are more pressing economic issues at home. But any rethinking on NATO only opens a host of other issues that may not be resolved easily or quickly. That may tie down Trump’s hands on any decision on NATO.

Trump will take a fresh look at relations with Russia. During his campaign, he had mentioned that he was open to improving relations with Putin. There is confluence of interest, at least in eliminating ISIS from Syria. But if Trump reaches out to Russian and succeeds in building new bridges with Putin, there may be early resolution to conflict in Syria. This may also impact east Europe and reduce tensions there. This will be important from EU’s perspective. Any reduction in tension with Russia will also spur trade and that is something an economically bruised Europe is looking forward to. But the cold war era warriors and policy wonks in Washington may not easily come around to reaching an understanding with Russia and hence the problem is likely to fester.

US relations with China may not see any significant change. Even though Trump has talked about China stealing American jobs, no precipitate action may be forthcoming. In fact, Trump’s deal making skills will be helpful in negotiating better trade deals with China. How far he can bring backs jobs from China to USA will be moot question. The US is a high cost center and manufacturing will be expensive, even if tax concessions are offered. On the other hand, China will maintain its currency advantage and enjoy lower costs of production. This will be a real challenge for the Trump administration.

India offers a lot of opportunities for the new administration. Indian Prime Minister has already reached out to Trump and congratulated him. President elect Trump has openly expressed his admiration for Modi. But beyond diplomatic niceties, India has a lot of work to do to step up the relationship with the US. India’s initiative to boost manufacturing under ‘make in India’ initiative and Trump’s focus to bring back jobs to the US may appear to be at loggerheads. But the reality is that there is significant room to maneuver a mutually win-win trade deal. For instance, while India can buy US arms, frigates, aircrafts etc., it can also be a huge market for green technologies – solar energy, digital smart city technologies, desalination technologies, waste disposal industries just to name a few.

Also huge opportunities lie in deepening a regional strategic cooperation that is already in its infancy. For example, Trump and Modi could inject new vigor to the ‘Pivot to Asia’ strategy that could have long term impact for US as well as regional stability in Asia.

 

Modi’s US visit puts India in the big league

In many ways, the just concluded visit to the US by Prime Minister Narendra Modi stands out. The visit significantly upgraded Indo-US bilateral relations via the new avatar of India’s foreign policy – economic diplomacy. This economic diplomacy is and will continue to define the contours of a new relationship with the US. If the response he received from President Obama, the leaders in US political spectrum or the tech majors is any indication, then Modi’s visit was a home run all the way.

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Modi’s visit to the US and in particular the Silicon Valley in California has generated a lot of interest and analysis. His visits to technology innovators like Tesla, Google and Facebook as well as his address to a packed audience of largely Indian Americans have been widely reported in US and the international media. Also an array US politicians lined up to meet, greet and take selfies with Modi. This prompted Obama once again to call Modi a rock star. This speaks of the positive image Modi has cultivated in a country that not long ago had denied him a visa.

While a galaxy of world leaders converged for the 70th session of the United Nations General Assembly (UNGA), it was Modi who converted this annual ritual into a charm offensive seeking investments and support for a national mission. The only other leader who attracted this kind of attention was Pope Francis.

Modi’s visit to the US has impacted at least three major areas – technology, diplomacy and defense – all of which will pay rich dividends to India in the coming days.

First, the technology ecosystem. The Digital India initiative is a smart deployment of technology to deliver governmental services to all citizens in a large country where even basic infrastructure may be deficient. Given the slow pace of recovery of the US economy, tech giants have been eyeing greener pastures in emerging markets. Silicon Valley honchos realizing the India opportunity, were candid in their admiration and have expressed eagerness to be part of this massive transformational Digital India initiative. They can play lead role in the successful design, execution and delivery of this mission.

The Google- GOI initiative to provide Wi-Fi facilities at over five hundred railway stations will connect millions of Indians and open up new opportunities for a whole ecosystem of large, medium, small and tiny enterprises. From the tea vendors to MNCs, it will revolutionize the way they do business. This will be replicated all over India by providing broadband access to approximately 500,000 villages in collaboration with Microsoft. Tesla is exploring how its TeslaWall – a wall-mounted battery charged by solar energy that is scalable to power whole neighborhoods – can be used to power villages and transform rural India. It is expected that cumulatively these initiatives will open up the flood gates of employment for millions.

There are sure gains on the diplomatic front as well. At a time when the US is silently redefining its foreign policy strategy, India has gravitated to the spotlight, which is no accident. The Syrian crisis, Paris climate change talks later this year, China’s faltering economy and dissension among its European allies have forced a rethink. Given the US’s inclination to work with Russia in resolving the Syrian crisis, notwithstanding loud ‘protests’ from the administration, it accentuates the ennui of the sole superpower and a newfound, albeit, hesitant willingness to share responsibility for policing the world.

India -specifically Modi – has astutely recognized this emerging white space and is projecting itself as a responsible player in international geopolitics. India’s approach to the Paris talks – that “will set the tone not just for today but for decades to come” – as well as increased involvement / deployment of Indian forces overseas are calculated strategic moves to bring India to the forefront in global geopolitics. Many may not be surprised to see Indian forces joining multinational forces to fight ISIS.

Modi’s US trip will have ramifications in the G4 group too. Today among the G4, arguably though, it is India that is on best terms with the US. The G4 – Brazil, Germany Japan & India – seeks to secure for themselves a permanent seat in the UN Security Council, is also a de-facto emerging economic block. India’s rising influence with the US is bound to yield ample collateral advantage in deciding trade and bilateral relations with three key economies of the world to its full advantage.

The $3 billion deal to buy Chinook and Apache helicopters has not only taken commercial / defense cooperation to a new high, but it has also handed a huge ‘influence quotient’ to India. This deal also has an ulterior message to India’s adversaries – Pakistan and China. They will have to reassess the cost of provoking India. Modi’s demand from US soil to the UN to unequivocally define terrorism is a pointer to the new confidence emanating from his proximity to Obama.

From India’s perspective, this enhanced attention and groundswell of goodwill in US power centers is surely a welcome development. It has indeed come a long way in a very short time, given that in the past, Indian prime ministers came and left the US almost unnoticed even by Indian Americans.

While the US media has been gushing about the visit, the Indian press back home has been critical and even questioning every outcome of the visit. They seem to ignore the facts on the ground and be driven by an agenda to project Modi in poor light at every opportunity. This is indeed regrettable.

One can definitely measure the success of his visit by the quantum of investments flowing into India. But what many have missed is the qualitative shift in the US’s perception of India as an economic power house. One could argue that its ‘influence quotient’ at the White House has been gone up. Positive image and diplomatic gains – intangibles as they are – are often perceived and experienced than measured quantitatively.

Modi returned to India with a bagful of benefits – some tangible than others. But he certainly moved India from a country perceived in America as always only providing a knee-jerk response to Pakistan’s atrocious Kashmir remarks at the UN to one which is setting a new economic agenda and controlling the narrative to its benefit like a global power.

 
 
 
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